Vacation rental fraud is a huge obstacle to the growth of the vacation rental industry. As an individual who owns multiple vacation rentals, enjoys renting vacation rentals and owns a vacation rental listing site (VacationRentalDirect.com) -I have seen all aspects of vacation rental fraud. Let us review as many as possible.
Vacation Rental Owner Scams:
Overseas Cashiers Checks
I get spammed all the time by individuals who are interested in renting one of my units for a family member of business associate who will be arriving from overseas. Inevitably all of these individuals want to send me a cashiers check for an amount greater than the amount of their stay to cover incidental expenses, etc. I supposed to newbies and perhaps members of the older generation, this scam works. It only works because the overseas cashiers check that they will send you will not clear for 30 days or more. Thus after 45 days you will most likely have spent the money and that’s when the cashiers check will bounce and you will be forced to come up with the cash.
Propagating the problem further, many bank tellers, ignorant of their own bank’s internal operations, are disseminating bad information to their customers, telling them the bank drafts clear in 24-48 hours. What really happens is that per the 1992 Federal Reserve Board Regulation CC, the bank MUST make the funds available in you account in 48 hours, but the check has not cleared/bounced yet. Get the picture? Two different events, the bank makes funds available, then the check either clears or bounces about a week later, after bouncing around to incorrect Federal Reserve locations, or bank accounts. Virtually no one understands the big picture mechanics behind depositing checks, including tellers. The average bank draft or cashiers check can take 2 weeks to clear, not 2 days. Yet everyone thinks cashiers checks are as good as cash, and they think they clear the next day. Bottom line, the scammers know the banking system well, and capitalize on this arbitrage of time quite well. The banks make the funds available in your bank account within 48 hours of your deposit, days before the cashiers check clears- or bounces. Then they take the money back out of your account, and blacklist you.
Vacation Rental Renting Scams
I would guess that renting a vacation rental presents the biggest opportunity for fraud. Just today I got a call from a vacationer who had sent $300 to an alleged vacation rental property owner for a deposit. The owner / scammer emailed back and said that his manager has received the deposit, but he had been in a car accident and was in the hospital, would the prospective renter mind sending in another deposit check for $300?
I’ve also had it where the prospective renter has sent in a deposit, signed a contract and went to the property for their stay only to find that the vacation rental did not exist.
For every 5 horror stories there are a 1000 success stories, but the risk remains. Prospective renters need to take every possible precaution to protect themselves against fraud. Here are
7 Ways to Avoid Vacation Rental Fraud
1) Pay via credit card. Credit card companies hate chargebacks. Scammers will have a lot of chragebacks and won’t be accepting credit cards for long.
2) Does the vacation rental have a website? Most vacation rental owners now have websites, and most scammers won’t go through the trouble of creating a website. Look up who owns the domain of the website, using a WhoIs server. If the ownership if the domain is hidden that should be a big red flag that something is suspicious. Cross reference the name of the domain owner with the owner of the vacation rental.
3) Does the vacation rental owner answer the phone or do they prefer to communicate only via email? If you cannot ever communicate via the phone, that is another huge red flag.
4) is the email address of the property owner a @aol.com, or @gmail.com or @yahoo.com or @hotmail.com address? Many vacation rental owners still have these types of email addresses, but so do many scammers, because they are easy to obtain. I always prefer to deal with owner who have the same email address as the domain of their website. In my own example, my website is www.rosewoodpointe.com and my email address is rentals@rosewoodpointe.com.
5) Is the property owner / property listed with the local Chamber of Commerce?
6) Does the Better Business Bureau have any recent reports against the owner?
7) Google the property owners name, phone and email address. If this individual has any record of previous misconduct many people will report it on public forums, etc. Google the actual property address as well to make sure the property exists.
8) Check out the various vacation rental fraud reporting blogs and databases, here are a list of the ones I am aware of:
- VacationRentalDirect.com Fraud Reporting
- Paradise Properties by Owner has some good scam alerts.
- HomeAway.com has a list of actual emails other property owners have received.
ULTIMATELY USE THE SNIFF TEST, IF SOMETHING DOESN’T SEEM RIGHT, IT PROBABLY ISNT’ RIGHT. ALL PROPERTY OWNERS SHOULD BE COURTEOUS AND WILLING TO ACCOMMODATE ANY REQUESTS YOU MAY HAVE REGARDING THEIR PROPERTY. IF THEY SEEM INDIGNANT OR RUDE OR UNWILLING TO BEND OVER BACKWARDS TO MAKE YOU FEEL GOOD ABOUT SENDING IN A DEPOSIT CHECK, THEN MOVE ON TO ANOTHER PROPERTY!!!!!!!!!
Scams on Vacation Rentals By Owner Listing Sites
As much as we would like to guarantee that every property listing on our site is legitimate - it’s just not feasibly possible to do so. Fraudsters can sign up using stolen credit cards at any time. Until we get the chargeback notice, that listing will be live on our site. There are areas which are more prone to scams, those areas we review the transactions much more closely. We even went so far as to block all listings that originated from Nigeria.
Note: I am going to try my first “trackback” here to reference a post on another blog at FlipKey, which also posts material about the vacation rental industry. It’s a good, well informed blog, check it out.
Anyways, FlipKey had mentioned that two other vacation rental by owner listing sites have recently implemented a sort of vacation rental insurance to protect vacationers from renting a vacation rental that doesn’t exist. We are considering offering a similar type of insurance for renters at VacationRentalDirect.com. You can read more about it at FlipKey’s blog HERE..
{ 4 comments… read them below or add one }
I just read this article and found it amusing. I own a Vacation Rental and have for some time. It is quite legitimate. I have an AOL email. I do not have my own website. I list on VRBO. I don’t have a website as it really doesn’t make sense. You will get very few bookings from a website due to having less exposure than if you list on a site such as VRBO. Wy would I have both, when I can book as many weeks as desired by using VRBO. I don’t list with the local Chamber of Commerce, as I really don’t need to. I do prefer to handle my listing via email, simply so I have a good track record and reminder system. In addition, when the inquiry is via email, I can reply, book and update the calendar at the same time. And, yes, I do answer my phone too. I don’t accept credit cards, except through a PAYPAL account. So I would say, you probably need to do a little more homework, as your statements are rather one-sided.
Actually I stand by by my comments 100%. You lose business as a result of your practices. An increasing number of folks simply will not rent with you, I am one of them. Your story will change when you decide to stop using VRBO. As a business owner you’ve gone and committed a cardinal sin you’ve put all your eggs in one basket. VRBO isn’t going to keep charging you $399.00 a year, those days are gone. Why? They are a publicly traded company now, fighting a war of percentages. They need 8%, not $399.00 (actually according to their latest 10Q, they get on average $321 per listing, up from $298 last year). They want $1000 or more from you per year, and they’ll get it. Again, why? Because you don’t have a choice. You failed to diversify your marketing practices and treat your business like a business. AOL email addresses, PayPal for vacation rentals, no phone number on your listing, no website, etc.. all are nails in your coffin. You don’t run a business, you have a hobby. Hobbies are nice, but don’t confuse yourself with a real business owner. You will learn the distinction very quickly when VRBO tells you to start paying $8 per inquiry and $10 per phone inquiry or take 8% of all your sales from VRBO. You’ll cry and throw up your arms or if you are a real business owner, you’ll take my advice and diversify, making any such actions on behalf of VRBO relatively inconsequential. Mark my words, it will happen.
don’t listen to ranters like admin. I agree with Kari. I’ve had NO problem with my vacation rentals doing everything she does, and for 16 years, except I always list a phone number. I sometimes use VRBO, but there’s others, too. I’ve never had a rental problem, or a property unrented.
Humm, I don’t know what to think. I just got a check from a woman in Russia who “over paid” me and ask that I sent the remaining balance to a third party! The envelope was post marked in Russia but all it contained was a check from a credit union in Washington state. The scammer use VRBO….I thought it was legit until I got her email explaining the check amount.